12 months to 31 March 2025
Summary
- A tough start to 2025 as fears of a global trade war escalate
- Chinese stocks soar due to stimulus and developments in artificial intelligence
- Europe scrambles to maintain support for Ukraine
- Another cut to UK interest rates, and Labour’s first budget in over a decade
- Modest positive returns from most Virgin Money funds over the year

Chinese stocks soar
In January, DeepSeek (a Chinese company founded in 2023) announced results of a new artificial intelligence (AI) app which rivalled the more established US models such as ChatGPT, but using older, cheaper computer processing chips. The news took markets by surprise, and Nvidia (who make high end computer chips) saw $600bn wiped off its market valuation in just one day, the largest ever one-day loss of any company. To put that into context, that is x10 the highest ever valuation of Enron, still one of the most famous corporate collapses of all time. Despite that record daily decline, Nvidia was still valued at close to $3 trillion, one of the largest companies in the world by stock market value.
Whilst the US tech giants remain dominant in terms of size, the Deepseek news did call into question whether they would dominate the emerging AI market, giving a lift to the Chinese tech sector. The Chinese authorities also unveiled a series of monetary and fiscal measures and property investment reforms, which boosted expectations for growth. Chinese stocks were up 12% in Q1 2025 and an impressive 38% for the 12 months to end of March – the best performing major market over the last 12 months.

Europe scrambles to maintain support for Ukraine
Closer to home, following President Zelenskyy’s infamous White House press conference, European heads of state scrambled to publicly back Ukraine. There were renewed pledges to meet NATO defence spending targets (2.5% of GDP) and the EU committed €150 billion to a new ‘rearmament’ fund. Germany approved a change in fiscal rules to allow an increase in defence spending, and European and UK aerospace and defence companies performed strongly as a result, with the UK sector rising 29% in the quarter and 35% for the 12-month period. UK Shares as measured by the FTSE All Share were up 4.5% in Q1 and 10.5% for the 12-month period.

Interest rates falling and the first Labour budget in over a decade
The Bank of England (BoE) cut interest rates to 4.5% at their February meeting, despite inflation rising to 3% in the 12 months to Jan 2025. Inflation did fall back slightly to 2.8% for the year to end of February . UK economic growth remains sluggish, and Rachel Reeves had a difficult task with her first budget to maintain manifesto pledges and raise money for public services. Reeves announced a rise in employer National Insurance contributions (NIC) which came into force in April. While this change is generating additional revenue, it will likely be a headwind to growth (a well-publicised aim of the government) with the prospect of an increase in job losses and or a redu ction in new hires. The expectation is that the BoE will make further interest rate cuts in 2025 to support the economy, depending on the outlook for inflation.
The European Central Bank has been more aggressive in cutting interest rates with the central rate cut to 2.75% and then again to 2.5% early March. Across the EU, economic growth was just 0.7% in 2024 but is expected to pick up (albeit by not much) to 1.3% for this year (source Ernst & Young). Over the last 12 months, European shares were up 4%.

Virgin Money investment funds
It’s been a mixed bag over the last 12 months, with good returns from our UK Tracker fund (+10%), low positive returns from our multi-asset funds (3 to 4%), and some ups and downs from our single strategy funds.
The UK Tracker fund benefited from strong performance from aerospace & defence companies (referenced above) and the mining sector, but the standout sector was banks (13% of the total market by value), up 48% in aggregate. UK banks are benefiting from high net interest margins and moderate or low loan losses, with the majority reporting strong earnings growth in 2024.
The Global Share Fund had a tough first quarter of 2025, in keeping with the declines seen in the US stock market – the largest regional allocation within the fund at approximately 58%. The fund had been our best performer through 2024, but a decline of near 6% in Q1 pulled down the latest 12 month return to 3%. On a more positive note, we moved our investments within Asia Pacific (about 8% of the fund) to a new sustainable strategy from Aberdeen, meaning all the underlying funds within the fund now benefit from enhanced oversight in terms of environmental, social and governance factors, which we believe will add value over time.
Our four multi-asset strategies (Defensive through to Adventurous) all delivered positive returns, between 3-4% over the 12 month period. The Balanced and Adventurous approaches, which invest the most in shares, did dip a little in the final quarter of the period, whilst the higher cash and bond allocations in the lower risk funds avoided those losses.
Our Climate Change Fund fell just shy of 8% over the 12 months. The fund invests in companies developing solutions to respond to climate change. High interest rates mean future earnings from new projects and products are worth less in today’s money – impacting current share prices, and with President Trump (a vocal supporter of the fossil fuel industry) taking office, it was a more challenging period for environmental and climate focused funds. The Bond Fund was up slightly (+0.5%) over the period, with losses from UK Government Bonds (concerns over the level of additional borrowing required by the Government) offset by positive returns from corporate bonds. Lower rated bonds outperformed A rated bonds, as taking on credit risk was rewarded.
You can see the return for each of our funds over the last five years on each fund’s web page.
Remember, the value of investments can go up and down, so you may get back less money than you put in. Tax depends on your individual circumstances and the regulations may change in the future.
Your quarterly market update - a look back in time

Winter 2024 market update
The Winter market update covers market activity for 12 months to 31 December 2024

Autumn 2024 market update
The Autumn market update covers market activity for 12 months to 30 September 2024

Summer 2024 market update
The spring market update covers market activity for 12 months to 30 June 2024
Take a look at the performance of our funds